Brazil's soybean production -
production inputs

Brazilian soybean production
has expanded rapidly in recently years. Soybeans were produced on 33.6 million
acres in 2000. The estimated yield for Brazilian soybeans is 45 bushels per
acre while the U.S. average yield has been around 38 bushels.

A discussion of the production
inputs and resources used in Brazilian soybean production is presented below.

Soils
and Fertility

Most of the soils in the
new areas being developed in Brazil are classified as tropical soils, or what
is known as Oxisols. The subsurface horizon contains only hydrated oxides of
iron and aluminum along with kaolinite clays and quartz sand. The soils are
subject to the formation of "hardpans". These are "old"
soils. The two largest areas of these soils are the Amazon Basin and the Congo
Basin of Africa.

The Oxisols are highly weathered
soils with low native fertility and low organic matter. They can be very productive
when supplemented with lime and phosphorus. The addition of lime and phosphorus
helps minimize the aluminum toxicity. Aluminum toxicity is often the major limiting
factor for crop production with very acid soils. As the toxicity increases the
root development decreases. Many native plants have high tolerances to aluminum
toxicity. The process of how aluminum toxicity occurs in the plant is not very
well understood at this time. However, much effort is being spent researching
ways to overcome the root development problems in these type of soils. Aluminum
toxicity is common throughout the world. It occurs in South America, southern
United States, Africa, and Australia. This is a common problem in older soils.

The low pH of the soils
also causes problems with availability of phosphorus. The availability of phosphorus
decreases significantly as the soil drops below 6 pH. Aluminum and iron increase
in availability. That is why some people have said that these soils would never
be productive. However, producers with a greater understanding of the soils
have been able to make these soils very productive by adding lime to increase
the pH. It should be possible for these soils to produce even greater yields
if producers have a greater selection of adapted varieties and a better understanding
of soil chemistry.

Soybeans require large amounts
of phosphorus compared to other crops such as corn or wheat. Phosphorus stress
on plants usually occurs when the plant is in the seedling stage and the roots
have not developed enough to supply all the needed phosphorus. Banding of fertilizer
applications would probably give better yield responses because the Oxisols
soil test low in phosphorus. It would improve the availability of the nutrients
applied.

Brazil has large supplies
of lime. The problem, similar to the US, is transportation costs. In the 1970s
when the government was trying to stimulate the growth in central Brazil with
government loans and grants, one of the key factors in deciding where to target
these new growth areas was the availability of low cost lime.

The soils in both the south
and the cerrados are very fragile. The soils in the cerrados are thin loess
(wind deposited) soils (2 to 3 feet) over sandstone and rock formations. The
high rainfall amounts present significant risk of high amounts of soil erosion.
Some of the areas have significant slopes, both in rise and in length. Producers
are using no-till and terracing to try to minimize erosion.

Weed
control

Brazilian farmers tend to
have fewer weed control problems. This is partly due to the fact that these
lands have not been farmed for very many years. However, they use no-till, which
will tend to increase weed pressure over time. They also have several weeds
that chemicals do not control very well.

Another challenge is that
temperatures stay warm after the soybean leaf canopy has fallen, which encourages
weeds to start growing before the crop is harvested. This late season weed growth
probably has very little if any yield impact. However, it can be a challenge
to harvest crops with young green weeds growing. The growth of new weeds after
the crop has matured and dropped leaves would be an unacceptable level of control
for most Midwest producers.

Brazilian research is currently
focusing on identifying herbicide resistant varieties, studying weed ecology
and allopathic effects, and developing integrated pest management control strategies.
Along with Monsanto, they have developed Round-Up Ready soybean varieties that
will be released as soon as they become legal. It is speculated that this could
happen within two years.

It is illegal to raise Round-Up
Ready soybeans in Brazil, but it is occurring. It is most prominent in the southwestern
part of Brazil where the seed comes in from Argentina and then continues to
be brown bagged. It is estimated that in some parts of the southwestern area
that over 60 percent of the soybeans are Round-Up Ready. A lot of these soybeans
are exported back out of Brazil through Argentina. Contamination is and will
become an even bigger problem for Brazil to deal with. It may provide an opportunity
for U.S. producers who can identity preserve soybeans to sell into certain markets
at a premium price.

The types of chemicals used
on soybeans are similar to ours. This includes Treflan, Classic, Cobra, Reflex,
Basagran, Pursuit, Poast, and Select, along with others that can be found in
the U.S. Chemical weed control costs about $15 to $20 an acre. This gives reasonable
broadleaf and grass control.

Perennial weed pressure
seems to be light. However, the pressure from perennial weeds will increase
over time. The fact that it rarely freezes will also increase perennial weed
pressure. In the south where labor is very cheap, hand hoeing may be a reasonably
good option. In the new cerrados where labor is higher priced, it may be less
of an option.

A major concern is the growing
number of herbicide resistant weeds. Many of the chemicals that producers use
are of the same chemistry and have the same mode of action. Continued and repeated
use of the same chemistry will put tremendous selection pressure on the weeds
to develop resistance.

In general, there are more
weeds in the southern part that has been under cultivation longer. The chemical
resistance to weeds is also showing up in the south.

Weed control in the new
cerrados is based on chemical control. Chemical carryover is less of a problem
due to the warm soil temperatures and higher rainfall. However, they will need
to rotate crops and chemical modes of action if they want to minimize the probability
of developing additional resistant weeds.

Diseases
and insects

The disadvantage of a climate
with warm winters is that you have more disease and insect problems. Disease
problems included stem canker and frogeye leaf spot. Brazilian scientists estimate
that 90 percent of the soybean seeds are treated with some type of systemic
or contact fungicide. Powdery mildew and white mold are also problems. Planting
in narrow rows enhances White Mold and some of the producers are considering
going to wider rows to help manage the disease. Sudden death syndrome is also
a major disease problem due to no-till and high rainfall.

Soybean Cyst Nematodes (SCN)
were discovered in Brazil in 1992. It is estimated that five million acres are
currently infested with SCN. The Mato Grosso Foundation is working to try and
develop varieties that are resistant to SCN and stem canker.

Insects are also more of
a problem due to the warm weather. Insects include velvetbean caterpillars,
southern stinkbug, and the ceratoma beetle. Some producers are using a biological
control for velvetbean caterpillars. Many of the producers are spraying several
times during the growing season to try to control diseases. This adds substantially
to the cost of production.

Machinery

The machinery costs of production
in Brazil vary significantly by areas and crops. Smaller and older equipment
is found in the southern region of Brazil. Farther north are farms that are
larger in size and appear to be more profitable. They tend to have larger and
newer equipment. We saw pictures of several large combines operating in one
field but we did not have the opportunity to observe this. It appears that no-till
is the major tillage system. This has resulted in less horsepower requirements
and less fuel usage. This also has reduced the use of heavy tillage equipment.
The exception would be the planting of sugar cane. Cane production currently
requires large tractors due to the tillage and planting methods used.

Almost all of the farm tractors,
harvesting equipment, and trucks use diesel fuel. The current price for diesel
is approximately $1.50 a gallon. Diesel is considered to be the "working
fuel" so it is free from fuel taxes. Gasoline costs approximately $3.00
per gallon. Cars cannot use diesel, only gasoline or alcohol.

In the southern region we
observed the use of smaller equipment. Typically this is a mechanical front
wheel assist tractor with less than 120 horsepower. Massey Ferguson tractors
were common. Many tractors were in the 50 to 100 horsepower size. Combines tended
to be older and most did not have cabs. New Holland combines with twelve to
fifteen foot platforms were quite common.

John Deere started in Brazil
with an arrangement with SLC, a German company, in 1945. SLC produces combines,
tractors, planters, cotton harvesters, and sugar cane harvesters. Recently John
Deere bought the remaining shares and is now 100 percent owner. John Deere equipment
is manufactured in Brazil under the brand name SLC and painted John Deere green.

Case-IH has been manufacturing
in Brazil since 1975, although they have been selling equipment in Brazil since
1920. Massey Ferguson has a manufacturing plant in Brazil and appears to be
the largest selling tractor, at least in southern Brazil.

Case-IH and John Deere appear
to be increasing market share. Of interest to watch will be whether these companies
can expand domestic production in Brazil and minimize the import taxes they
now face. Taxes can be as much as 35 percent.

Most of the planters in
the south are made by a company called Jumil. They are a no-till planter set
up as a five row planter for corn on approximately 36-inch rows. They can add
units to plant soybeans in 18-inch rows. The new planters are larger with more
units and use air-metering systems. Jumil has been in businesses since 1936,
is ISO 9001 certified since 1995, and uses the latest computer design software
for engineering and production.

Brazil has imported about
175 cotton pickers into the cerrados area. These are John Deere five row pickers.
Due to the rapidly expanding acreage of cotton and shortage of labor in the
new frontier, producers are purchasing these larger, more expensive units. The
largest domestically manufactured cotton picker is a two-row picker.

Brazilian producers are
also importing other brands of cotton pickers. A major factor in the importing
and selling of equipment is the amount of seller financing available. Difficulties
in accessing capital and unfavorable currency exchange rates are continuing
problems.

They use traditional sprayers,
foggers, and aerial application for spraying. Producers don't need a license
to buy or apply chemicals. Most of the application is done by the farmers themselves
and is not custom applied by the cooperatives. This is partly due to cheap labor
and the large number of farm laborers.

Brazilian made machinery
is less expensive than comparable equipment from the U.S. Hired laborers operate
most of the equipment so there are very few tractors with cabs and only a few
combines with cabs. So equipment manufacturing costs are less. It is estimated
that a new 100 horse power tractor costs $50,000 and a new SLC combine with
cab and a fifteen foot platform costs $90,000.

Brazilian researchers estimate
machinery costs for soybean production is about 20 percent of the total cost
of production. This would be approximately $32 per acre. However, this would
not include trucking to a port. If you compare this number with the 2,500 acre
farm in the southern area it is pretty reasonable.

Assuming a 2,500 acre farm
has $250,000 invested in equipment with a repair cost of $10 per acre and two
gallons of fuel used per acre, the machinery costs, excluding labor, is about
$23 per acre. This is less than what a typical Iowa farmer would have. This
is due to the use of older equipment, lower initial investment costs, more hours
of use per year, and lower costs of repair. By using no-till, the amount of
tillage equipment and fuel needed is also decreased. Labor costs are low enough
that producers substitute labor for machinery.

Up until 1995, Brazil had
a uniform national fuel pricing system. The price of fuel was controlled by
the government at the wholesale level. Through the use of a tax the government
kept the price of diesel fuel constant no matter how far you were from the refinery.
This was an important and significant subsidy for the development of agriculture
in the cerrados.